Talk Quesada forum

Hi All,


Looking for some advice on this little conundrum. It is our intention to apply for Residency. My wife and I will be arriving in the area soon with the intention of spending a few months to firstly decide on a locale and then hopefully find our almost permanent residence. My wife and I are aged 54 and both semi-retired, I am fortunate enough to be in receipt of a pension and we both have jobs that allow us to remain in Spain for eight weeks and then return to the UK for a month to work some shifts to top-up the pension and then return to Spain.


Residency my understanding is-
1. If you intended to spend more than 183 days per calendar year or more than 90 consecutive days you must apply for residency.
2. Because we are both under normal retirement age we must have private health insurance.
3. On all of our worldwide earnings we pay tax to the Spanish Government rather that the UK.


So basically we will have three sources of income, this is where I need the advice. I understand the meaning of ‘all worldwide earnings’ but is there a way that some of our earnings, say for example my wife's, could remain in our UK bank account rather than paying all into our Spanish account therefore eliminating the need to regularly transfer Euros back to Sterling?


Once again thanks for the advice to a potential ex-pat novice.


Jim.

If you are a resident in Spain, it doesn't matter where your money is paid you must still declare it.
If you are taxed in UK then you will not be taxed on that income in Spain but you should notify the UK tax people that you are resident abroad (in the EU) so will not be liable for tax in UK except for certain pensions.
If you have an income that is taxed at source in UK, then you declare it on your annual Spanish tax return but also show the amount of tax taken. With the dual tax agreement between UK and Spain, you will not be taxed on it but will have it taken into account to assess the tax rate you pay in Spain.
For example, if you declare an income of (say) 50,000 euro a year but tax has been taken off 30,000 then you will pay tax in Spain on the remaining 20,000 euro but your tax band will be the one that the 50,000 comes under and not just the 20,000. Of course, the Spanish tax allowances come into effect on that income to reduce the tax so you won't pay on the whole 20,000 remaining, just the amount after the allowances come out.
Hope that makes sense.
If you have savings and bank accounts amounting to over 50,000 euro in a UK account then you have to declare that in your first year and then any increases of 20,000 plus. This includes every account with an IBAN (bank account number).
You also declare any assets worth over 50,000 euro on the same form (property, stocks and shares and so on).
You won't pay tax on it but you will pay any tax on income (such as interest) that it gains. You need to inform your UK bank you are resident (P85 I think) so they won't take tax off your interest in UK.
To iterate, it doesn't matter which country the income is paid, it still needs to be declared on your tax return in Spain.
See a good gestor or solicitor is the best advice I can give.

Marcliff,

As usual you've come up trumps. Thank you very much for the clarification. Our first stop on arrival will be to source a good solicitor.

Again, thanks very much
Jim

Sorry to hi-jack this post but is the Jim's point number 1 correct? I thought you only had to apply for residency if you were in Spain for more than 183 days in a 12-month period, not if you were here over 90 consecutive days. We plan to spend about 170 days each winter in Spain but want to remain UK resident.

jimmi wrote:Residency my understanding is-
1. If you intended to spend more than 183 days per calendar year or more than 90 consecutive days you must apply for residency.
2. Because we are both under normal retirement age we must have private health insurance.
3. On all of our worldwide earnings we pay tax to the Spanish Government rather that the UK.

Hi Ton Tri,

That's my understanding, but there is every possibility that i could be wrong. I sure someone will give us a definitive answer.

Yes, over 183 days in a calendar year to become a fiscal resident and pay income tax. Over 90 days you can become a non-fiscal resident and keep your UK fiscal status (sorry, missed that on the original post). I was assuming you meant live here and just go back for a month each year, not every couple of months.
You would need to keep an eye on the time you spend here, though.
Freedom of movement applies for 3 months. Longer than that and you simply register on the foreigners' register and gain a resident card but it's only if you are here over six months (or intend to live here over 6 months) in one year that you become fiscal resident.
However, 2 months here, 1 month in UK throughout the year would give 8 months here and 4 months in UK so you would go over the 183 days.
Also be careful with Brexit looming. Non-EU residents can only spend 3 months here.
So, intend to stay over 3 months but less than 6 months in one year = non-fiscal residency and pay non-resident taxes.
Intend to stay over 6 months in one year then fiscal residency and complete an annual income tax return.

Many thanks Marcliff. With Brexit on the way it looks like we will have to plan for end Oct to Jan in Spain, back to the UK for a couple of weeks, then back out till April. Not a problem although a bit of a pain.

Actually the above makes sense as I can only get 90 days EHIC Plus Expand travel insurance and 90 days house insurance.

Thanks for the clarification guys.

Jim

TonTri wrote:Actually the above makes sense as I can only get 90 days EHIC Plus Expand travel insurance and 90 days house insurance.

It's also why they introduced NIE certificates for 3 months only for a while. It was intended to give you time to either get a residence card or a non-residence card.
Not well advertised or explained so they binned that idea after a couple of years.